Enron and auditing

Jun 2nd, 2015

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Augusta State University

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The effects are also touching Wall Street. In the past few weeks, investors have shifted their attention to other companies, making a frenzied search for any dodgy accounting that might reveal the next Enron. Canny traders have found a lucrative new strategy: sell a firm's stock short and then spread rumours about its accounts.

Findings: Firstly, Enrons Board of Directors failed to fulfil its fiduciary duties towards the corporations shareholders. Secondly, the top executives of Enron were greedy and acted in their own self-interest. Thirdly, many of Enrons employees witnessed the wrongdoings of Enrons top executives, and quite a few whistleblowers came forward. Lastly, Enron outsourced external auditing for its internal audit function instead of establishing a functionally internal audit mechanism and its external auditor acquiesced in the application of questionable accounting and fraudulent financial reporting.Enron and auditingThe lessons from EnronAfter the energy firm's collapse, the entire auditing regime needs radical changeTHE mess just keeps spreading. Two months after Enron filed for Chapter 11, the reverberations from the Texas-based energy-trading firm's bankruptcy might have been expected to fade; instead, they are growing. On Capitol Hill, politicians are engaged in an investigative orgy not seen since Whitewater, with the blame pinned variously on the company's managers, its directors, its auditors and its bankers, as well as on the Bush administration; indeed on anybody